E-commerce leaders Flipkart and Amazon have often been accused by sellers and other stakeholders of circumventing the norms under Press Note 3.Mugdha Variyar | ET Bureau | July 11, 2018, 09:01 IST

E-commerce companies like Snapdeal and ShopClues have welcomed the government’s decision to reinforce Press Note 3 for FDI implementation, stating that it will facilitate a level-playing field for marketplaces as well as sellers. The companies have said the new rules will dissuade “malicious practices” being done by certain platforms for some “proxy sellers”.

E-commerce leaders Flipkart and Amazon have often been accused by sellers and other stakeholders of circumventing the norms under Press Note 3, which disallows one seller from selling more than 25% of the total sales on the marketplace.

Amazon and Flipkart, who between them have over 70% market share in Indian online retail space, did not respond to queries.

ET reported last week that the government has decided to create a separate wing comprising officials from the Department of Industrial Policy and Promotion and the Enforcement Directorate to enforce implementation of Press Note 3, which deals with foreign investment in e-commerce.

The separate government wing will be a temporary solution till the time the government prepares a national policy on e-commerce, for which the commerce ministry has formed a think-tank comprising industry members. The government has also mulled setting up a permanent regulator to deal with broader aspects such as FDI implementation issues, use and purpose of data collection by e-commerce companies, consumer protection, and other matters.

“The decision of having a regulator to reinforce the Press Note 3 is indeed a welcome move, which has a potential to leave no room for any marketplace to circumvent the intent of the law while possibly adhering to its letter,” a ShopClues spokesperson said.

“This will certainly facilitate level-playing field for all level of marketplaces and discourage any malicious practice carried out so far by any of the operators,” the spokesperson said.

Snapdeal and ShopClues have been struggling to gain marketshare in the e-commerce space dominated by Flipkart and Amazon. In 2017, Snapdeal held only 2.5% marketshare while Shop-Clues had 2.1%, compared to 39.5% marketshare held by Flipkart group and 31.1% by Amazon, according to Forrester.

“Marketplaces are a crucial part of India’s digital commerce journey and the misuse of this model by some platforms to become retailers themselves is displacing small sellers from the online opportunities,” a Snapdeal spokesperson said.

“A level-playing field for small sellers will lead to balanced growth and will ensure that the gains from digital commerce accrue to millions of genuine sellers and not just to proxy sellers created by some marketplaces,” the Snapdeal official said.

Seller associations and other e-commerce stakeholders have often complained about the preference given to seller entities such as Cloudtail, a joint venture between Amazon and Infosys cofounder Narayana Murthy’s family office Catamaran Ventures, which has been one of the main sellers on Amazon India since 2014. The All India Online Vendors Association had in May filed a petition with the CCI against Flipkart for giving “preferential treatment” to a few seller entities and thus enabling steep discounts on its platform.